GoMechanic accused of fudging accounts for financial gains

The seven-year-old start-up has acknowledged financial misconduct to artificially inflate company valuations in a bid to raise more capital. Mayank Dhingra traces the rise and fall of the service provider.

-  Mayank Dhingra

High stakes and being overambitious could be the best way to describe this service-oriented start-up. Just as it was slated to raise more capital in its latest Series-D round of funding, seven-year-old car-repair and servicing start-up - GoMechanic - saw a spanner in the works with fresh audits revealing financial misconduct at this tech-driven company.

On January 18, Amit Bhasin, the company's co-founder, took to online professional network LinkedIn to admit that his start-up had done financial wrongdoings. "We made grave errors in judgement as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret," his revelation said.

While it lost the opportunity of raising around US$ 80 million (Rs 649 crore) from venture-capital (VC) fund SoftBank among others, to save its business from a dire cash-crunch situation, the company further announced to restructure its business and lay off "approximately" 70 percent of its workforce in the process.

"We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions. This restructuring is going to be painful, and a third-party firm will be conducting an audit of the business," Bhasin's social media post read.